Improved Vehicle Operations in SSA

Mustapha Benmaamar, TRL

Surveys main conclusions

• 9 out of 10 imported vehicles are used vehicles (15 years average) and High vehicle operations costs

• High queuing time (1 hour minibuses up to 3,5 days for trucks) and Low utilisation of vehicles (35,000km/year for mini-buses and 45,000km/year/truck)

• Operators have a misperception of the life costs of operating used vehicles

• High imports duty and petrol taxes, 30% higher than Kenya and Tanzania

• Limited access to vehicle financing, Only one leasing company, Only 500 commercial vehicles financed so far (30% guarantee+22% interest rate over 2 yrs period)

• Low safety and security on the roads, one of the highest accident rate in Africa (160 fatalities per 10,000 veh)

• High association and park loading fees and ‘’excessive competition’’, meaning oversupply of vehicles

Figure 1: Comparative vehicle operating costs, brand new v.s. second hand mini-bus over 5 year period

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VOC-used

Comparison of life cost of operating used and new vehicles

Benefits of replacing used minibuses

• Each dollar invested in minibus replacement will produce around 2.0 dollars in VOC savings to transport operators. These savings do not include gains associated with reduction in external costs (accidents, congestion and pollution costs) and savings related to increase in level of service and reliability.

• Assumption:TRL's research work undertaken in Pakistan shows that the overall serviceability of used vehicles decreases on average by 10% per year while labour and spare parts maintenance costs increase respectively by 15% and 20% per year

Access to vehicle finance

• Access to vehicle finance is only possible for established transport companies

• There is only one leasing company and yet it has financed only 500 commercial vehicles so far

• Reduction of interest rate (22% to 12%) and extending

period of repayment (5 to 7 years) could lead to 13% in

VOC savings

• How about providing help to raise the required risk guarantee (30%)

Safety issue

• One of the highest road accident rate in Africa (160 fatalities per 10,000 veh)

• Drivers bad behaviour and training and, vehicles road unworthiness are the principal causes of accidents

• Drivers have no work contract and no fixed wage. The use of the vehicle is contracted out to the driver at a fixed daily rate. Drivers daily wage will be any additional amount generated on top of the fixed rate after deducting fuel cost, police fines and brokers and park loading fees. Drivers overload vehicles and speed...

Benefits of Training Drivers on Accident Reduction using Private approach

Benefits of reducing interest rates and taxation

• Reduction of interest rate (22% to 12%) and extending period of repayment (5 to 7 years) could lead to 13% in VOC savings.

• How about providing means to raise the required risk guarantee (30%)

• A reduction of petrol taxes (40% to 30%) and vehicle import duty (30% to 20%) will reduce VOC/km by 5%

• Yes, but this could only be effective in competitive markets where part of gains in productivity are transferred to transport user.

• Is the transport market competitive?

Options for improving vehicle operationsbased on policy reforms and new legislation

• Reduce import taxes and set up a support framework of vehicle financing and put an age limit to vehicle imports

• Provision of bus driving and training schools and introduce a compulsory bus driving license

• Provision of appropriate vehicle inspection equipment and training and introduce effective vehicle inspection measures

• Provision of TA to the Ministry of Transport and allocate routes on a basis of effective transport needs

• Set up an independent transport regulatory body and enforce effectively transport regulations

• Introduce new legislation to prescribe the size of associations and enhance competition

• Provision and Management of bus and truck parks using PPP schemes to introduce more transparency

Options for improving vehicle operationsbased on policy reforms and new legislation

• Reduce import taxes and set up a support framework of vehicle financing and put an age limit to vehicle imports

• Provision of bus driving and training schools and introduce a compulsory bus driving license

• Provision of appropriate vehicle inspection equipment and training and introduce effective vehicle inspection measures

• Provision of TA to the Ministry of Transport and allocate routes on a basis of effective transport needs

• Set up an independent transport regulatory body and enforce effectively transport regulations

• Introduce new legislation to prescribe the size of associations and enhance competition

• Provision and Management of bus and truck parks using PPP schemes to introduce more transparency

Ghanaian lorry parks

•Key transport terminals (both pass. and freight)

•Owned by local government

•‘Managed’ by the main unions

•Restrictive operating practices

•Losers are the users (i.e. the travellers)

•Opportunities for private participation

Ghana UTP: lorry park rehabilitation(Accra, Kumasi, Takoradi, Tamale, Tema)

• Proposal:– Improved facilities– Contracting out management

• Practice:– Improved facilities– No change in management or operations

Characteristics of transport in Southern Cameroon

• Transport operations are organised by syndicates

• The syndicate determines fares and routes• The drivers wait in line and only leave when

they are full• The syndicate negotiates with the major for

access and fees for the terminal• The vehicles tend to be small (taxis),

overloaded and in poor condition

Transport characteristics in Northern Cameroon

• There are a number of travel agencies operating in competition with each other

• The major has granted licenses for these travel agencies to operate out of individual terminals in the town

• The operations are professional and regular• The vehicles are clean, well maintained and

large 30 seaters

Impact of these differences on the customer

• In the South passenger fares were between 53% (10kms) to 370% (200kms) higher than in the North

• In the North passenger fares dropped by 50% in 2 years as competition increased

• In the North customers had a safer and more comfortable ride

• Greater service frequency to rural areas• Customer/user becomes the focus

A way forward

• Inputs of Freight Transport Association, UK to provide assistance to newly formed truck associations in Uganda and Ghana (October 2001)

• Inputs of social expert to provide assistance to Private Road Users Associations (October 2001)

• Production of sensitisation tools and material to facilitate dissemination at stakeholders workshops (November 2001)

• Production of articles and papers to conferences (SSATP, CODATU…)

• Organisation of workshops in Ghana and Uganda (Early

2002)